The Weekly Rap! Friday March 28th, 2014

The National Debt is currently: $17,546,412,702,957.00 is higher by about 20 BILLION. I post this so we will be aware of what we are leaving the next generation.

The Dow last traded at 16,285 about 50 pts. lower than where it was last Friday. The S&P 500 is trading at 1,853. Gold is trading at $1,294 an ounce, while oil futures at $101.77 a barrel. Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.70/Gal.

Mortgage Backed Securities or “MBS” yields are interest rates at which banks sell their loans into Fannie Mae and Freddie Mac bond programs. The FNMA 30-year fixed 4.0% coupon, containing 4.25% – 4.625% mortgages, pretty much the benchmark or how rate sheets are priced these days is currently trading at 104.00 about .375 worse than where we were last Friday at this time. Basically each percent change in the price of the security translates to the price (or points paid or credited) of the mortgage rate. The higher the number (price), the better the rate.

In economic news this week; The reader’s digest version is the economy continues to limp along at a snails pace with Most of the upward movement due to higher healthcare costs as consumers now have to pay their own health insurance due to the new “Affordable” health care law known as Obama Care..

The economy’s growth in the final three months of 2013 was bumped up to a 2.6% annual pace from 2.4%, but the increase stemmed mainly from higher spending on health care and little else. The solid pace of growth in the waning months of 2013, following a 4.1% advance in the third quarter, showed an economy that entered the new year with fresh momentum but still not fully healed more than four years after the end of the Great Recession. And some of that momentum was lost in the first quarter owing to a brutally harsh winter that disrupted business operations across large stretches of the U.S. and kept consumers indoors.

Higher health-care expenditures accounted for nearly three-fourths of the revised increase in consumer spending in the last three months of 2013. Bigger electricity bills also contributed. While most expect growth to accelerate later this year, the first quarter is shaping up to disappoint. The expectation is for gross domestic product to taper off to 1.6%. GDP reflects the total value of all goods and services produced by the economy. The U.S. has expanded at an average pace of 3.3% since 1929, but growth has slowed to a 2.3% rate in the first four full years since the Great Recession ended. Oh by the way, the stock market has more than doubled in value in the last 4 years.

The national activity index, a gauge of economic activity, swung back to positive territory in February. The index rose to 0.14 from negative 0.45 in January, while the three-month moving average fell to negative 0.18 from positive 0.02. The index is a weighted average of 85 different economic indicators, designed so that readings of zero indicate trend growth. When the three-month average value moves below -0.70 following a period of economic expansion, there is an increasing likelihood that a recession has begun.

The purchasing managers index or, PMI, for the U.S. fell to 55.5 in March from 57.1 in February, but still showed improving conditions for manufacturers. Readings over 50 indicate growth. In March, output was barely changed at 57.5. New orders dipped to 58.0 from 59.6 and employment fell to 53.9 from 54.1. The slight drop-off in the March PMI comes after the index rose in February to the highest level in almost four years, helped by manufacturers catching up after winter-related softness in January.

A gauge of consumer confidence rose to 82.3 in March from an upwardly revised 78.3 in February, the Conference Board reported. The expectations index rose to 83.5 in March from 76.5 in February, while a barometer for the present situation declined to 80.4 from 81. Apparently while consumers were moderately more upbeat about future job prospects and the overall economy, they were less optimistic about income growth. The expectation is that the economy will continue improving and believe it may even pick up a little steam in the months ahead.

According to a report from the University of Michigan and Thomson Reuters, consumer sentiment declined to a final March reading of 80, the lowest level since November, from a final February level of 81.6. Sentiment levels are watched to get a feeling for the direction of consumer spending.

Consumer spending rose 0.3% in February at the fastest rate since November as Americans spent more on health care and utilities, but purchases of durable goods fell for the third straight month in a negative sign. Partly offsetting the gain, however, was a reduction in rate of spending in January. Spending increased at a 0.2% clip in the first month of the year instead of 0.4% as previously reported. Personal income also rose 0.3% in February.

The savings rate edged up to a four-month high of 4.3% from 4.2% in January. Inflation-adjusted disposable income, meanwhile, jumped 0.3% to mark the biggest advance in five months. Also, inflation as gauged by the core PCE price index posted a slight 0.1% increase in February, and it’s up just 1.1% over the past 12 months. The overall PCE index also rose 0.1% last month and its climbed 0.9% in the past year, offering further evidence that inflation remains muted.

On the Real Estate front: Home prices ticked down 0.1% in January for a third straight month after a particularly harsh winter, according to S&P/Case-Shiller’s 20-city composite index, as strong year-over-year appreciation showed signs of moderating. Including January, prices remained about 20% below a 2006 peak. Price gains over the past year should encourage more sellers to place their homes on the market, thereby raising inventory and cutting upward pressure on prices.

There’s concern about recent weakness in housing-market data. Unusually poor weather may have also a played a role in the drop in home sales, but it’s unclear how much of recent weakness is due to a particularly harsh winter or limping demand. If the weakness is weather related, housing projects and purchases that were delayed could show up in coming months.

New homes sales were down 3.3% from January’s one-year high, the government said Tuesday. New home sales are 1.1% lower compared to one year ago, reflecting weaker demand because of higher mortgage rates and home prices as well as a bitterly cold winter.

Slumping for an eighth month, a gauge of pending home sales fell 0.8% in February to the lowest level in more than two years, signaling that upcoming activity may slow, the National Association of Realtors reported. The index of pending home sales hit 93.9 in February – the lowest reading since October 2011 compared with 94.7 in January. Low inventory, declining affordability and poor weather have hit the housing market in recent months. Pending sales typically close within two months. An index reading of 100 equals 2001′s average contract activity level.

On the Employment front: Applications for unemployment benefits fell last week to the lowest level in four months, indicating that layoffs have slowed and perhaps a hint that hiring is about to pick up. Initial jobless claims are a gauge of whether layoffs are rising or falling and changes in the number of people seeking benefits tend to correlate over time with how many jobs the economy is producing.

You can visit my corporate website at: http://bill.bartok.stanfordloans.com

Sincerely,

 

Bill Bartok

Mortgage Advisor MLO# 445991

The nicest compliment I can receive is the referral of your family, friends and co-workers.

Thank you!

 

The Weekly Rap! Friday March 21st, 2014

The National Debt is currently: $17,526,993,132,952.00  is higher by about 23 BILLION. That’s 50 Billion increase in just 2 weeks.  I post this so we will be aware of what we are leaving the next generation.

The Dow last traded at 16,341 about 275 pts. higher than where it was last Friday.  The S&P 500 is trading at 1,870.  Gold is trading at $1,335 an ounce, while oil futures at $99.48 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.65/Gal.

Mortgage Backed Securities or “MBS” yields are interest rates at which banks sell their loans into Fannie Mae and Freddie Mac bond programs. The FNMA 30-year fixed 4.0% coupon, containing 4.25% – 4.625% mortgages, pretty much the benchmark or how rate sheets are priced these days  is currently trading at 104.38 about .60 worse than where we were last Friday at this time.  Basically each percent change in the price of the security translates to the price (or points paid or credited) of the mortgage rate.  The higher the number (price), the better the rate.

In economic news this week; The reader’s digest version is the economy continues to limp along at a snails pace with manufacturing and Industrial production showing signs of improvement.  Inflation is still in check and the new Fed Chairwoman commits a major faux pas in tilling the market what she really thinks.

An index of manufacturing conditions in the New York region showed modest improvement in March after a sharp drop in the prior month.  The Empire State’s general conditions index rose to 5.6 in March from 4.5 in February. The index had fallen by 8 points in February, a drop attributed to severe winter weather.  The Empire State index is often the first of several regional manufacturing gauges to be released. They can frequently be volatile from month to month, but taken together they present one of the timeliest reads on a critically cyclical sector.

Industrial production climbed 0.6% in February, the Fed reported earlier this week, the fastest monthly growth rate since August as output recovered after the unusually rough weather to start the year.

Consumer prices rose slightly, 0.1%, in February mostly because of higher food and housing costs, but overall inflation remained quiet.  The price of food jumped 0.4%, the largest gain since September 2011, because of higher costs of meat, poultry, fish, dairy and vegetables.  Yet while food prices have only risen 1.4% over the past year, they are likely to increase in the coming months because of the drought we’re experiencing here in California and unusually cold weather in other parts of the country.  By some estimates, food prices at grocery stores could rise 3% or more in 2014 and give a sharp pinch to consumers.

Excluding food and energy, so-called core consumer prices also rose 0.1% in February.  Housing costs, the biggest expense for most consumers, advanced 0.2%.  Prices also rose for medical care and airline tickets.  The core rate is viewed by the Fed Gods as a more useful gauge of underlying inflationary trends.  Over the past 12 months, the core rate of inflation has risen just 1.6%, well below the Fed’s limit for inflation.

The Federal Reserve met on Wednesday and scaled back its bond-buying stimulus strategy again and tried new ways to signal to markets that it will keep short-term interest rates low for a long time, but the Fed Gods also rattled financial markets by suggesting in a few ways that rates could rise a bit earlier and faster than investors had expected.  Although the new approach still means the first rate hike since 2006 won’t take place until next year.  For the text of the FOMC decision click on the link.  For a great synopsis of the Feds actions and guidance since December 2008, click here.

At its meeting, the Fed dropped its 6.5% unemployment-rate target for the first rate hike and said it would look at a “wide range” of factors, including inflation levels and job creation, before charting out a new path.  They basically took out any numerical thresholds and are going to look at everything.

Following the Feds meeting Yellen spoke for an hour and the market heard but three words; “around six months.”  One glitch that got people talking was when Yellen was a little too specific: Answering a question about how long the Fed might wait to raise interest rates after the Fed stopped its post-financial crisis policy of buying bonds to hold rates down, she committed the ultimate Washington gaffe — she said what she apparently meant. “About six months,” she said… and the Markets immediately sold off.  Before this Fed meeting, the market had been expecting the first rate hike to come toward the end of 2015, perhaps in October or December. Now we’ve heard from the Fed chair that the first hike could, (emphasize could), come two or three meetings before that.  Anyone remember Alan Greenspan?

On the Real Estate front:  The National Association of Home Builders/Wells Fargo housing-market index, a gauge of confidence among home builders, rose one point to 47 in March, but remains close to the lowest level since May and signals that builders, generally, are pessimistic about sales trends. rose this month.  March is the second consecutive month that the index has been below a key reading of 50 (readings under 50 signal that builders, generally, are pessimistic). The builder-confidence gauge hit a recent peak of 58 in August, which was the highest level since 2005.

Construction on new homes fell slightly in February, but in a sign that work will pick up as the weather warms, builders filed more permits to start new projects such as multi-unit condominiums and apartment buildings.  Permits reflect how many new homes companies plan to build in the near future. The rise in permits signals that builders plan to ramp up construction as warm weather arrives. Single-family homes account for about three-quarters of the housing market. Many prospective buyers are opting for previously owned homes, however, which tend to be less expensive than new properties. But even sales of existing homes have fallen sharply over the past six months.

Sales of existing homes were down 0.4% in February, the National Association of Realtors reported. Sales rates have trended down since the summer as rising mortgage rates and home prices cut affordability. Constrained inventory and unusually poor weather may have also played a role in weak buying, the trade group said.  First-time buyers have had a particularly tough time in this housing market, making up just 28% of existing-home sales last month, compared with a long-term average of 40%.  Locally there have been 156 new listings in the El Dorado Hills/Placerville area in the last 30 days.

On the Employment front:  Applications for unemployment benefits rose in the second week of March, but remain near the lowest level since the end of the recession almost five years ago.  Initial jobless claims climbed by 5,000 to a seasonally adjusted 320,000 in the period of March 9 to March 15.  The number of people seeking benefits each week is seen as a good gauge of how many layoffs are occurring in the economy. The latest claims report took place during the survey week used by Labor to calculate monthly employment growth for March, suggesting that job creation could end higher compared to the first two months of the year. A lower claims figure typically correlates with higher monthly job growth.

You can visit my corporate website at: http://bill.bartok.stanfordloans.com
Sincerely,

Bill Bartok

Mortgage Advisor MLO# 445991

The nicest compliment I can receive is the referral of your family, friends and co-workers.

Thank you!

The Weekly Rap! Friday March 14th, 2014

Congratulations to all the High Achiever Real Estate Agents in El Dorado County presented with recognition of their hard work today at our annual luncheon where we raised money for local high school students to further their college education through scholarships.  Thank you to all to contributed.  We broke records this year!

The National Debt is currently: $17,503,721,572,952.00  is higher by about 28 BILLION. That’s 121 Billion increase in just 2 weeks.  I post this so we will be aware of what we are leaving the next generation.

The Dow last traded at 16,065 about 380 pts lower than where it was last Friday.  The S&P 500 is trading at 1,841.  Gold is trading at $1,381 an ounce, while oil futures at $99.00 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.52/Gal.

Mortgage Backed Securities or “MBS” yields are interest rates at which banks sell their loans into Fannie Mae and Freddie Mac bond programs. The FNMA 30-year fixed 4.0% coupon, containing 4.25% – 4.625% mortgages, pretty much the benchmark or how rate sheets are priced these days  is currently trading at 104.38 about .25 better than where we were last Friday at this time.  Basically each percent change in the price of the security translates to the price (or points paid or credited) of the mortgage rate.  The higher the number (price), the better the rate.

In economic news this week; The reader’s digest version is the economy continues to limp along an a snails pace

Small-business sentiment slumped in February, on concerns over sales, the economy and employment driving the downturn, according to the National Federation of Independent Business which reported its small-business index dropped 2.7 points to 91.4.  The worst component of the report was earnings trends, with a net negative 27% reading, while the best was plans to make capital outlays or spending, with a net positive 25% reading.  The index hasn’t been over 100 since 2006.

Sales at U.S. retailers rose in February for the first time in three months as shoppers boosted purchases of a variety of goods after being cooped up by one of the harshest winters in years.  Retail sales rose 0.3% last month, the Commerce Department reported. Unless sales rebound sharply in March, retail spending in the first quarter of 2014 could end up lower than in the final three months of 2013 and weigh on growth. The economy is on track to expand by 1.7% in the first quarter vs. 2.4% in the fourth quarter.

A gauge of consumer sentiment declined in March to hit the lowest level in four months, cut by weaker expectations for the economy, according to a Friday report.  The gauge from the University of Michigan and Thomson Reuters fell to 79.9 this month from a final February level of 81.6.

Wholesale prices, the producer price index or PPI, fell 0.1% in February to mark the first decline in three months.  Declines in clothing-store margins and gasoline largely accounted for the drop in overall wholesale prices. The price of wholesale goods rose by 0.4% in February while services retreated by 0.3%.  Excluding the volatile categories of food, energy and trade, so-called “core” wholesale prices rose 0.1% for the second straight month.  Personal consumption, a new gauge that could foreshadow changes in the consumer price index, decreased 0.2% in February. Over the past year PPI has risen 0.9%, down from 1.2% in January, in another sign of slacking inflationary pressure in the economy.

The federal budget deficit narrowed a bit in February, the Treasury Department reported, shrinking 5% from a year earlier as receipts jumped and spending only modestly rose.  The shortfall was $194 billion for February, versus the $204 billion recorded in the same month a year ago. The gap narrowed mostly thanks to higher intake of receipts including individual and corporate taxes, as well as higher Federal Reserve earnings (well the Fed holds over 4+ Trillion Dollars’ worth of securities).   Total receipts were up 18% compared to February 2013. The fiscal 2013 shortfall is the first deficit of below $1 trillion of President Barack Obama’s tenure.

On the Real Estate front:  According to the White House’s 2014 economic report that was released Monday, a gauge of mortgage-credit availability rose slightly last month, and has been heading higher for two years.  The trend could support the housing market’s recovery.  Stronger housing demand depends critically on the easing of credit standards (that might have been over-tightened following the financial crisis), particularly for first-time homebuyers.  Healthy jobs growth is also key for more home sales.  But if borrowers can’t get a loan, that’s going to hold back the market’s rebound.

On the Employment front:  Job openings rose to 3.97 million in January from 3.91 million in December.  Compared with same period last year, January’s job openings rose 8%, as private-sector openings increased 10% to 3.61 million, and government positions fell to 369,000 from 421,000.  With 10.24 million unemployed people in January, there were about 2.6 potential job seekers per opening, matching December’s ratio. In January 2013, there were 12.32 million unemployed people — about 3.3 potential seekers per opening. When the recession began in December 2007, there were less than two potential job seekers per opening.  The level of hires was almost 5 million when the recession began.

In a bit of good news, the number of people who applied for unemployment benefits in the first week of March fell to the lowest level in more than three months, perhaps a sign of an uptick in labor-market conditions?   The average of new claims over the past month, a more reliable gauge than the volatile weekly number, also sank to a three-month low. The four-week average declined by 6,250 to 330,500.

You can visit my corporate website at: http://bill.bartok.stanfordloans.com
Sincerely,

Bill Bartok

Mortgage Advisor MLO# 445991

The nicest compliment I can receive is the referral of your family, friends and co-workers.

Thank you!

The Weekly Rap! Friday March 7th, 2014

Don’t forget to “Spring Forward” and set your clocks back 1 hour Saturday night.  This is the part of daylight savings time I have a love/hate relationship with.  I love that is stays lighter later, but I hate that I have to lose an hour to get it.

The National Debt is currently: $17,425,075,475,245.00  is higher by about 43 BILLION. That’s 134 Billion increase in just 2 weeks.  I post this so we will be aware of what we are leaving the next generation.

The Dow last traded at 16,425 about 100 pts higher than where it was last Friday.  The S&P 500 is trading at 1,873.  Gold is trading at $1,338 an ounce, while oil futures at $102.79 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.52/Gal.

Yields on 10-year Treasury notes, which move inversely to prices, last traded at 2.79%.  30-year Treasury Bond yields last traded at 3.72%.  Rates on 30-year fixed-rate mortgages are about 4.625% this week. MBS yields are interest rates at which banks sell their loans into Fannie Mae and Freddie Mac bond programs. Rising yields mean higher consumer-mortgage rates.

The FNMA 30-year fixed 4.0% coupon, containing 4.25% – 4.625% mortgages, pretty much the benchmark or how rate sheets are priced these days  is currently trading at 104.12 about .65 worse than where we were last Friday at this time.  Basically each percent change in the price of the security translates to the price (or points paid or credited) of the mortgage rate.  The higher the number (price), the better the rate.

In economic news this week; the big news of the week was that the U.S. generated 175,000 jobs in February and the unemployment rate edged up to 6.7%.  The reader’s digest version is economic growth is just limping along, that is not really growing and not really falling.

Have you ever noticed that we are creatures of habit?  We basically believe that any trend we are in will continue on.  We for some reason cannot see that the trend will eventually change, that winter will become spring, that the stock market will not continue to go up (anyone remember the late 1990’s?) or that real estate values do not go up forever in a straight line.  Eventually we will come out of the stagnant growth phase we are in.  What it will take, I don’t really know, but when we get excited about just 175 new jobs growth something tells me we are stuck in a trend.

Consumers boosted spending in January, but most of the increase went to pay for medical care and higher utility bills during an unusually cold winter.  The advent of the Affordable Care Act, commonly known as Obamacare, triggered a flush of spending in the first month after the law took effect. Health-care spending jumped 1.6% in January.

On a positive note:  The final reading of U.S. purchasing managers’ index accelerated to 57.1 in February. The index was well above the 53.7 reading in January.  Readings over 50 indicate growth. The final reading for February was the highest level in almost four years. The report shows that output and new business picked up sharply. Volumes of new work increased at the sharpest rate since April 2010.

The productivity of U.S. workers and businesses slowed sharply in the final three months of 2013, according to newly revised government figures.

Productivity rose a revised 1.8% from October through December, down from an original estimate of 3.2%. By contrast, productivity rose 3.5% in the third quarter.  Productivity is a good barometer of a nation’s well-being. Companies earn higher profits when productivity rises and they can afford to pay more to workers, especially if they need to hire to keep up with demand. The wealthiest countries have the most productive workers.  Yet productivity has risen slowly over the past few years in the aftermath of the Great Recession and there’s little evidence that it’s about to sharply increase.

In the Fed’s “Beige Book” report, economic conditions in January and early February were difficult to discern due to severe cold temperatures and a series of storms that left much of the country trapped under snow and ice.  In sector after sector and region after region, the weather played havoc on conditions, the report said. There were 119 separate mentions of the word “weather” in the Beige Book. Fed Chairwoman Janet Yellen said it might be “months” before the Fed gets a good reading of economic conditions. The Beige Book is a collection of anecdotes on the economy used to help the Federal Reserve prepare for its next interest rate setting meeting.

The net worth of American households grew last year by $9.8 trillion, or 14%, according to the Federal Reserve.  That includes a nearly $3 trillion jump in the fourth quarter alone.  Most of the gains in net worth, $5.6 trillion, came through the stock market, as the S&P 500 climbed nearly 30%, and $2.3 trillion came in the value of real estate as home prices rose.

On the Real Estate front:  Home prices according to CoreLogic, including distressed sales, increased by 12.0 percent in January 2014 compared to December 2013.  January marks the 23nd consecutive month of year-over-year home price gains.  Excluding distressed sales, home prices were up 9.8 percent year over year in January 2014.  Despite gains in December, home prices nationwide remain 17.3 percent below their peak, which was set in April 2006.  Including distressed sales, five states registering the largest year-over-year home price appreciation in January and California was in the group at +20.3% (16% excluding distressed sales.  The CoreLogic Pending HPI is an exclusive metric that provides the most current indication of trends in home prices. It is based on Multiple Listing Service (MLS) data that measure price changes for the most recent month.

On the Employment front:  The U.S. generated 175,000 jobs in February despite harsh winter weather, suggesting the economy has not slowed as much as a recent spate of indicators appear to show.  The unemployment rate, meanwhile, edged up to 6.7% from 6.6% to mark the first increase in 14 months. Yet the rate rose because more people entered the labor force in search of jobs, which is usually a sign that they think more work is available.  The better-than-expected headline number on jobs paves the way for the Federal Reserve to continue to withdraw stimulus from the economy.

The real truth is that even at 175,000 jobs growth is more of a break-even number.  We need to see double or triple this number to see real economic growth.  So be careful what you get excited about.  The pace of hiring is a lot softer compared to last fall. The economy has added an average of 131,000 jobs in the past three months, compared to an average of 225,000 from September through November. And the number of people who have been out of work at least six months rose by the largest amount in almost two years.  It may take another month or two to get a better read on the economy’s health because of unusually cold and snowy weather in the early part of 2014.

Monthly_Job_Growth_3-2014

The number of people who applied last week for unemployment benefits fell to the lowest level since the end of November, but the level of initial claims appears to have been distorted by harsh winter weather.

You can visit my corporate website at: http://bill.bartok.stanfordloans.com

Sincerely,

Bill Bartok

Mortgage Advisor MLO# 445991

The nicest compliment I can receive is the referral of your family, friends and co-workers.

Thank you!

The Weekly Rap! Friday Feb 28th, 2014

My apologies for the lateness of this report, I was in Reno at a company event the last couple days and just got back today.

The National Debt is currently: $17,382,872,856,284.00  is higher by about 91 BILLION.  I post this so we will be aware of what we are leaving the next generation.

The Dow last traded at 16,321 about 300 pts higher than where it was last Friday.  The S&P 500 is trading at 1,859.  Gold is trading at $1,328 an ounce, while oil futures at $102.76 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.43/Gal.

Yields on 10-year Treasury notes, which move inversely to prices, last traded at 2.64%.  30-year Treasury Bond yields last traded at 3.58%.  Rates on 30-year fixed-rate mortgages are about 4.50% this week. MBS yields are interest rates at which banks sell their loans into Fannie Mae and Freddie Mac bond programs. Rising yields mean higher consumer-mortgage rates.

The FNMA 30-year fixed 4.0% coupon, containing 4.25% – 4.625% mortgages, pretty much the benchmark or how rate sheets are priced these days  is currently trading at 104.78 about .75 better than where we were last Friday at this time.  Basically each percent change in the price of the security translates to the price (or points paid or credited) of the mortgage rate.  The higher the number (price), the better the rate.

In economic news this week; If you’re looking for some good economic news today, then you’ve come to the wrong blog.  I really wish I had better news to report but it’s just more of the same anemic stagnant growth in our economy.  The reader’s digest version is economic growth is not as rosy as originally thought and things are getting worse.

The government chopped its estimate of U.S. growth in the waning months of 2013 today, calling into question whether the economy is primed to accelerate in 2014 after years of a sluggish expansion.  The total value of all goods and services produced by the economy, known as gross domestic product (GDP), rose 2.4 % in the fourth quarter.  Initially the Commerce Department had reported the U.S. grew 3.2%. The reduced growth estimate suggests the U.S. did not enter the new year with as much momentum as previously believed.

The report also casts doubt on whether the U.S. is ready to grow in 2014 at its fastest rate since the recession ended, as many private economists and the Federal Reserve believe.  The first quarter has gotten off to a poor start, a problem partly but not entirely explained by unusually harsh winter weather.

According to a gauge of the national economy from the Federal Reserve Bank of Chicago released Monday, an underperforming U.S. economy got worse in January, hit by production-related weakness.  Activity in January posted below-average growth for a second month, hitting negative 0.39, the lowest result in six months. The gauge takes 85 economic indicators into account, covering areas such as production, jobs and consumer spending. Negative values signal a below-average rate of economic growth, a zero reading means that the economy is growing at its historical trend rate, and positive values signal faster-than-average growth.

On the Real Estate front:  A gauge of “pending” home sales rose slightly at 0.1% in January, but remains near a two-year low, signaling that upcoming activity may be slow, the National Association of Realtors reported. The index of pending home sales was 95 in January, compared with 94.9 in December, which was the lowest reading since November 2011. Low inventory, declining affordability and poor weather are hitting results, NAR said. By region, the gauge of pending home sales in January fell 4.8% here in the West. Pending sales typically close within two months. An index reading of 100 equals 2001′s average contract activity level.

Sales of “new” single-family homes started 2014 with surprising strength, with January posting the fastest pace in more than five years.  Home sales jumped 9.6% in January to a seasonally adjusted annual rate of 468,000, hitting the highest level since July 2008. On Wednesday, the government upwardly revised December’s pace to 427,000.

The pace of home-price growth slowed down at the end of 2013, but despite this the year saw the fastest calendar-year price growth in eight years.  U.S. home prices ticked down 0.1% in December, declining for a second month, with 11 of 20 tracked cities posting drops, according to S&P/Case-Shiller’s composite index. After adjustments, home prices in December rose 0.8%, down a bit from 0.9% in November. On a year-over-year basis, home prices rose 13.4% in December, the fastest calendar-year growth since 2005, supported by a low inventory of homes available for sale. However, December’s year-over-year growth is down from a recent peak of 13.7% reached in November.

On the Employment front:  The number of people applying for unemployment benefits rose 14,000 last week to match the highest level of 2014, suggesting that progress in a gradually recovering U.S. labor market has slackened off.

You can visit my corporate website at: http://bill.bartok.stanfordloans.com
Sincerely,

Bill Bartok

Mortgage Advisor MLO# 445991

The nicest compliment I can receive is the referral of your family, friends and co-workers.

Thank you!